Leveraging your investments

 With interest rates falling to historical lows, it brings to light the importance of financing and the benefits that securing a low rate offers.  Two major factors come in to play with these low rates: great income-to-debt ratios on the investment property and drastic principal pay-down with each principal and interest payment.  My main goal on investment properties (multi family or any income producing property) is to make sure they make money.  The second main goal for most clients is to have some write-offs to offset income.  You can't depreciate the land but you can depreciate the improvements and that cost recovery is a large aspect to many investors.  With such low interest rates, an exponentially higher portion of each payment is going towards the principal of the loan, thus causing your internal rates of return on investments to be higher.  If you can make $8000/yr on your investment due to positive cash flow, as well as reduce your principal amount owed by another $4000, that is adding 50% to your cash-on-cash returns even though it is not realized income.  This is a large aspect to investing that many people fail to acknowledge but it adds a lot of equity to your positions with these lower rates once you've held the investment for a few years.